Open AccessSensitivity and Feasibility Analysis of Citronella Oil Business
Author(s) -
Mohammad Prasanto Bimantio,
Anthonius Dhinar Hasto Wardoyo
Publication year - 2020
Publication title -
soca : jurnal sosial ekonomi pertanian
Language(s) - English
Resource type - Journals
eISSN - 2615-6628
pISSN - 1411-7177
DOI - 10.24843/soca.2020.v14.i02.p11
Subject(s) - profit (economics) , business , production (economics) , product (mathematics) , agricultural science , agricultural economics , economics , microeconomics , environmental science , mathematics , geometry
Today, citronella essential oil business in Indonesia is fronting two major problems: a diverse range of product quality and fluctuated price. Meanwhile, the global market demand keeps increasing until 3–5% per year. This fact indicated that the citronella essential oil business was having a high chance of participating in the global market. This study aimed to analyze the citronella essential oil business feasibility as a “people-oriented-economy” activity and determine variables that affected the feasibility in implementing this business. Citronella essential oil is produced by a steam distillation process with a production capacity of 2,400 kg/year. The number of citronella essential oil international product sales was reaching 76% with the selling price of IDR 360,000/kg and reaching 24% on the local market with the selling price of IDR 180,000/kg, therefore the total of sales in 300 days/year was IDR 7,360,320,000. Based on this calculation the total of profit obtained in a year was IDR 99,463,383. An effort through managing the material and selling price sensitivity already done to maintain the BEP and B/C values. The increasing price was anticipated by managing the product selling price fraction, while the decreasing of the selling price anticipated by managing the market fraction.